ITO 18(2)(4), MUMBAI V. UNITY BEEL JOINT VENTURE, MUMBAI

ITA 6537/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75235 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 194C

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO, AM ./I.T.A. NO.6537/M/2012 ( / ASSESSMENT YEAR: 2009 - 2010) INCOME TAX OFFICER - 18(2)(4), R.NO.109, 1 ST FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012. / VS. UNITY BBEL JOINT VENTURE, 1252 PUSHPANJALI OLD PRABHADEVI ROAD, PRABHADEVI, MUMBAI 400 025. ./ PAN : AAAAU 1947 R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SANTOSH KUMAR / RESPONDENT BY : NONE / DATE OF HEARING : 1.1.2014 / DATE OF PRONOUNCEMENT : 8 .1.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 30.10.2012 IS AGAINST THE ORDER OF THE CIT (A) - 29, MUMBAI DATED 31.8.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS WILLFULLY BOOKED ALL THE BILLS RAISED DURING THE FY 2008 - 2009 AS ON 31.3.2009 TO AVOID APPLICABILITY OF SECTION 40(A)(IA) OF TH E ACT. 2. ON THE FACTS AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THAT THERE IS VIOLATION OF PROVISION OF SECTION 40(A)(IA) IN RESPECT OF DEDUCTION OF TAX AT SOURCE ON PAYMENT / CREDIT OF SUB - CONTRACT CHARGES DURING THE FY 2008 - 2009 AND THE ASSESSEE I S IN DEFAULT FOR NOT DEPOSITING THE TDS AMOUNT IN THE GOVT. TREASURY WITHIN THE PRESCRIBED TIME LIMIT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) FAILED TO APPRECIATE THAT PROVISO TO SECTION 40(A)(IA) SUBSTITUTED BY THE FINANCE ACT, 2010 EFFECTIVE FROM 1.4.2010 IS NOT APPLICABLE RETROSPECTIVELY . 2 4. FOR THESE AND OTHER REASONS IT IS SUBMITTED THAT THE ORDER OF THE CIT (A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 19,24,90,415/ - . DURING THE ASSESSMENT, AO MADE CERTAIN DISALLOWANCES I.E., (I) AN AMOUNT OF RS. 18,05,86,614/ - WAS DISALLOWED U/S 40(A)(IA ) FOR NON - DEDUCTION OF TDS U/S 194C IN RESPECT OF LABOUR CHARGES FOR SUB - CONTRACTORS AND (II) RS. 1,19,03,801/ - WAS D ISALLOWED AGAINST THE CLAIM OF THE ASSESSEE U/S 80IA(4) OF THE ACT IN RESPECT OF PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT. WHILE DISALLOWING THE SAID TWO AMOUNTS, AO IS OF THE OPINION THAT THE REG ARDING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT, ASSESSEE DEFAULTED THE PAYMENT OF TDS IN TIME AND WITH REGARD TO THE DISALLOWANCE OF CLAIM U/S 80IA(4), AO OPINED THAT THE ASSESSEE IS ONLY A CONTRACTOR AND NOT A DEVELOPER AND FAILED TO FULFILL THE CON DITIONS FOR CLAIM OF DEDUCTIONS AS PROVIDED IN SECTION 80IA(2) AND 80IA(4)(I)(C) OF THE ACT. T HEREFORE, THE ASSESSEES CLAIM IS NOT ALLOWABLE. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORIT Y. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE SAID ADDITION OF RS. 18,05,86,614/ - MADE BY THE AO U/S 40(A)(IA) OF THE ACT VIDE PARA 4.5 OF THE IMPUGNED ORDER . FURTHER, HE CONFIRMED THE ADDITION OF RS. 1,19,03,801/ - VIDE PARA 5.2 OF HIS ORDER. AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT (A), THE REVENUE RAISED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD DR HEAVILY RELIED ON THE ORDER OF THE AO . 6. ON THE OTHER HAND, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. 7. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER OF THE CIT (A) IN GENERAL AND PARA 4.5 IN PARTICULAR, WE FIND THE SAME DECISION OF THE CIT (A) ON THE 3 ADDITION MADE U/S 40(A)(IA) OF THE ACT IS REASSESSABLE. R ELEVANT PARA 4.5 READS AS UNDER: 4.5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ARGUMENTS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT. THE FACT IS THAT APPELLANT CLAIMED SUB - CONTRACT CHARGES OF RS. 25,08 ,02,475/ - IN THE PROFIT & LOSS ACCOUNT. OUT OF THIS THE ASSESSING OFFICER HAS HELD THAT IN THE CASE OF FOLLOWING RA BILLS TDS HAS BEEN DEDUCTED AND PAID INTO THE GOVERNMENT ACCOUNT ON TIME. THE BILLS ARE RA BILL NO.7 RS. 1,51,29,323/ - RA BILL NO. 5 RS. 3,46,65,813/ - RA BILL NO.6 RS. 2,05,20,726/ - TOTAL RS. 7,03,15,862/ - THE ASSESSING OFFICER STATED THAT IN THE CASE OF BALANCE PAYMENT OF RS. 18,05,86,614/ - BEING SUB - CONTRACT CHARGES TDS HAS BEEN DEDUCTED AND HAS BEEN PAID DURING APRIL TO AUGUST, 2009. THE ASSESSING OFFICER STATED THAT THE DUE DATE OF PAYMENT FOR TDS IN RE SPECT OF THIS AMOUNT WAS 31.3.2009. SINCE, THE RA BILLS ARE DATED JULY 2008, DECEMBER 2008 AND JANUARY, FEBRUARY 2009, IN THESE CASES THE ASSESSING OFFICER ARGUED THAT AS PER SECTION 40(A)(IA) THE DUE DATE OF PAYMENT WAS 31.3.2009. SINCE, THE APPELLANT H AS PAID THE TAXES TO THE GOVERNMENT ACCOUNT ONLY BY AUGUST, 2009, BEFORE FILING OF RETURN THEY HAVE TO BE DISALLOWED AS PER THE PROVISIONS OF SECTION 40(A)(IA). HE HAS DISALLOWED AMOUNT OF RS. 18,05,86,614/ - . AS HAS BEEN DISCUSSED EARLIER , APPELLANT HAS CLAIMED THAT HIS CASE IS COVERED BY THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATIONS ITA NO.302 OF 2011. I FIND THAT THE ONLY ISSUE IS TO BE DECIDED IS WHETHER IN THE CASE OF THE APPELLANT, DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS OF SECTION 40(A)(IA) TAKING INTO CONSIDERATION THE FACT THAT THE APPELLANT HAS DEPOSITED THE TAX DEDUCTED AT SOURCES INTO GOVERNMENT ACCOUNT BEFORE FILING THE RETURN WITHIN TIME ALLOWED UNDER SECTION 139(1). THE ISSUE IS SQUARELY COVERED BY T HE DECISION O F MUMBAI TRIBUNAL IN THE CASE OF GOLDEN STABLES LIFESTYLE CENTRE PVT. LTD. IN ITA NO.5145/M/2009 DATED 13.9.2010 AND THE DECISION OF MUMBAI ITAT IN THE CASE OF PIYUSH C MEHTA ITA NO.1321/M/2009 DATED 11.4.2012. IN THE ORDER OF PIYUSH C MEHTA THE JURISDICT IONAL ITAT HAS FOLLOWED KOLKATA HIGH COURT IN THE CASE OF VIRGIN CREATION ITA NO.302 OF 2011 AND HAS CONCLUDED AS UNDER: 18. THE QUESTION NOW IS AS TO WHETHER TO FOLLOW THE DECISION OF THE HONBLE SPECIAL BENCH WHICH HAS TAKEN THE VIEW THAT AMENDMENT BY THE FINANCE ACT, 2010 TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS PROSPECTIVE AND NOT RETROSPECTIVE FROM 1.4.2005 OR THE DECISION OF THE HONBLE CALCUTTA HIGH CURT TAKING A CONTRARY VIEW. ON THE ABOVE QUESTION, THE LD COUNSEL FOR THE ASSESSEE BRO UGHT TO OUR NOTICE THE DECISION OF THE ITAT DELHI IN THE CASE OF TEJ INTERNATIONAL (P) LTD. VS. DCIT (2000) 69 TIJ (DEL) 650 , WHEREIN IT WAS HELD THAT IN THE HIERARCHICAL JUDICIAL SYSTEM THAT WE HAVE IN INDIA, THE WISDOM OF THE COURT BELOW HAS TO YIELD TO THE HIGHER WISDOM OF THE COURT ABOVE , AND THEREFORE, ONCE AN AUTHORITY HIGHER THAN THIS TRIBUNAL HAS EXPRESSED ITS ESTEEMED VIEWS ON AN ISSUE, NORMALLY, THE DECISION OF THE HIGHER JUDICIAL AUTHORITY IS TO BE FOLLOWED. THE BENCH HAS FURTHER HELD THAT THE F ACT THAT THE JUDGMENT OF THE HIGHER JUDICIAL FORUM IS FROM A NON - JURISDICTIONAL HIGH COURT DOES NOT REALLY ALTER THIS POSITION, AS LAID DOWN BY THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GODAVARIDEVI SARAF 113 ITR 589 (BOM.). 19. IN VIEW OF THE ABOVE, WE HOLD FOLLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT THAT AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, BY THE FINANCE ACT, 2010 IS RETROSPECTIVE FROM 1.4.2005 . CONSEQUENTLY, ANY PAYMENT OF TAX DEDUCTED AT SOURCE DURING PREVIOUS YEARS RELEVANT TO AND FROM AY 2005 - 2006 CAN BE MADE TO THE GOVERNMENT ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S 139(1) OF THE ACT. IF PAYMENTS ARE MADE AS AFORESAID, THEN NO DEDUCTION U/S 40(A)(IA) OF THE ACT CAN BE MADE. ADMITTEDLY IN TH E PRESENT CASE THE ASSESSEE HAD DEPOSITED THE TAX DEDUCTED AT SOURCE ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S 139(1) OF THE ACT AND THEREFORE, THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE ORDER ACCORDINGLY AND ALLOW THE APPEAL BY THE ASSESSEE. 4 IN OTHER WORDS, THE ITAT HAS HELD THAT THE DECISION OF BHARTI SHIPYARD LTD BY SPECIAL BENCH, MUMBAI HAS BEEN REVERSED BY THE DECISION OF VIRGIN CREATIONS BY KOLKATA HIGH COURT. IT IS CONCLUDED BY ITAT THAT THE ORDER OF THE HIGH COURT WILL PREVAIL OVER THE DECISION OF SPECIAL BENCH. IT IS ALSO OBSERVED BY THE ITAT THAT THE AMENDMENT BEING REMEDIAL IN NATURE COULD APPLY RETROSPECTIVELY AND WILL COVER EVEN MATERS OF AY 2005 - 2006. THE AO HAS BEEN GIVEN OPPORTUNITY TO REBUT THIS CONTENTION OF THE APPELLANT. HE HAS ALSO FILED A REMAND REPORT. NO OTHER DIFFERENT VIEW OF JUDICIAL AUTHORITY IS BROUGHT TO MY NOTICE. HENCE, IT IS CONCLUDED THAT THE PAYMENTS MADE BY THE APPELLANT AMOUNT TO RS. 18,05,86,614/ - ARE NOT HIT BY THE PROVISIONS OF SECTION 40(A)(IA) AS DEDUCTED TAX HAS BEEN PAID TO THE GOVERNMENT ACCOUNT BEFORE FILING OF RETURN OF INCOME . RESPECTFULLY FOLLOWING THE DECISION OF CALCUTTA HIGH COURT AND ALSO DECISION OF ITAT IN THE CASES CITED (SUPRA), THE DISALLOWANCE U/S 40(A)(IA) AMOUNTING TO RS. 18,05,86,614/ - IS DELETED . 8. WE FIND THERE IS NO DISPUTE ON MAKING OF PAYMENT OF TDS BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME. UNDER SUCH FACTUAL MATRIX, THERE IS NO NEED FOR INVOKING THE SAID PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THERE ARE VARIOUS PRECEDENTS (SUPRA) TO SU PPORT THE SAME. THEREFORE, C ONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE WHILE DELETING THE ADDITION OF RS. 18,05,86,614/ - MADE BY THE AO. THEREFORE, THE SAID DECISION OF THE CIT (A) ON THIS ISSUE DOES NO T CALL FOR ANY INTERFERENCE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOU NCED IN THE OPEN CO URT ON 8 T H DAY OF JANUARY, 2014. S D / - S D / - (I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 8 /01/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI